Principal Issues: Are the costs of repairing decks at a condominium complex eligible for the home renovation tax credit?
Position: If the repairs are part of routine repairs and maintenance, normally performed on an annual or more frequent basis, the costs will not qualify for the HRTC. If the costs are restorative and not normally performed on an annual or more frequent basis, they will qualify for the HRTC.
Reasons: Annex 5 2009 Federal Budget Documents; Bill C51.
XXXXXXXXXX 2009-033811 Robert Dubis January 6, 2010
Dear XXXXXXXXXX :
Re: Home Renovation Tax Credit
Thank you for your correspondence received on August 13, 2009, regarding the new home renovation tax credit (HRTC). You asked if the cost of repairing decks for your condominium complex is eligible for the HRTC. We apologize for this delayed reply.
The legislation regarding the new HRTC has been enacted and is contained in section 118.04 of the Income Tax Act. The HRTC provides individuals with a temporary 15% non-refundable income tax credit on eligible home renovation expenditures for services received or goods acquired, after January 27, 2009, and before February 1, 2010. However, expenditures for services received or goods acquired under agreements entered into before January 28, 2009, do not qualify for the HRTC. Taxpayers can claim this credit for the 2009 tax year on eligible expenditures exceeding $1,000, but not more than $10,000, which will result in a non-refundable tax credit of up to $1,350.
Under section 118.04, expenditures qualify for the HRTC if they are directly attributable to a renovation or an alteration of an eligible dwelling, including land that forms part of the eligible dwelling, and if the renovation or alteration is of an enduring nature and is integral to the eligible dwelling. Such expenditures include the cost of labour and professional services, building materials, fixtures, equipment rentals, and permits.
An eligible dwelling is a housing unit located in Canada that is owned by the individual, at the time of the renovation, and ordinarily inhabited by the individual, his or her current or former spouse or current or former common-law partner, or his or her children at any time after January 27, 2009, and before February 1, 2010. Therefore, any housing unit that an individual owns and uses personally, including a home and a cottage, qualifies for the HRTC.
In the case of condominium corporations, the HRTC will be available for eligible expenditures incurred to renovate the condominium unit that is the individual's eligible dwelling as well as the individual's share of the cost of eligible expenditures incurred for common areas. Generally, the expenditures incurred for common areas are allocated to condominium owners based on the governing documents of the condominium corporation.
You state that the condominium complex plans to repair approximately XXXXXXXXXX decks at a total cost between $XXXXXXXXXX and $XXXXXXXXXX . The determination of whether an expenditure will meet the above-mentioned criteria is a question of fact. If the repairs are part of routine repairs and maintenance, normally performed on an annual or more frequent basis, the costs would not qualify for the HRTC. However, if the repair is restorative in nature and not normally performed on an annual or more frequent basis, the costs would qualify for the HRTC.
To support a claim for renovations to common areas of the condominium made by the condominium corporation on behalf of the individual owners, owners will need documentation from the corporation or the board of directors that identifies the amounts incurred for the renovation work. The documentation should clearly identify the individual condominium owner's portion of these expenses. Supporting documentation should include the name of the contractor and, if applicable, the goods and services tax/harmonized sales tax registration number, a description of the work performed, and the dates when the work or services were performed. Generally, such documentation can be a letter from the corporation that is signed by an authorized individual and can include copies of any agreements, invoices, or receipts.
You can find more information on the HRTC on the Canada Revenue Agency's Web site at www.cra.gc.ca/hrtc.
We trust that the information provided is helpful.
Yours truly,
Nerill Thomas-Wilkinson
Acting Manager
For Acting Director
Ontario Corporate Tax Division
Income Tax Rulings Directorate
Legislative Policy & Regulatory Affairs Branch